Hong Kong Monetary Authority reform (HKMA reform)

Reducing risk on the Asian market

The Hong Kong Monetary Authority reform aims at improving transparency on the Asian derivatives market.

About the Hong Kong Monetary Authority (HKMA)

The Hong Kong Monetary Authority (HKMA) is the government authority in Hong Kong responsible for maintaining monetary and banking stability. Its main functions are:

  • maintaining currency stability within the framework of the Linked Exchange Rate system;
  • promoting the stability and integrity of the financial system, including the banking system;
  • helping to maintain Hong Kong's status as an international financial centre, including the maintenance and development of Hong Kong's financial infrastructure; and
  • managing the Exchange Fund.

Introduction to HKMA's market reform

Following the G-20 commitment to improve transparency and risk mitigation in the financial markets, a process of extensive regulatory change began across the Asia-Pacific region.

In 2011 and 2012, the HKMA and Securities and Futures Commission (SFC) consulted the market on a proposed regulatory regime for the Over-The-Counter (OTC) derivatives market. The Joint Supplemental Consultation, issued in July 2012, set out in more detail the scope of dealing, advising and other activities to be regulated under the new regime. The consultation also set out proposals for regulating the activities of persons whose positions are so large as to raise concerns about systemic risk (i.e. systemically important participants).

To comply with strict international standards, the new regulatory regime focused heavily on the OTC derivatives markets, including reporting of specified OTC derivatives transactions to the Hong Kong Trade Repository (HKTR), clearing of specified transactions at designated Central Counterparties and margining of non-cleared derivatives.

The Hong Kong Trade Repository will also provide services for trade matching and confirmation.

Supervision in line with Basel III

The HKMA seeks to establish a regulatory framework in line with international standards, in particular those recommended by the Basel Committee on Banking Supervision. The objective is to devise a prudential supervisory system to help preserve the general stability and effective working of the banking system, while at the same time providing sufficient flexibility for authorised institutions to take commercial decisions.

HKMA’s market reform and its impact on market participants

These new requirements impact market participants in most Asian countries, including Hong Kong, Australia, Singapore and Korea.

HKMA published the final rules in Q4 2014.

To view the Reporting requirements, please visit our HKMA Reporting page.


Last updated: 27 February 2017